The Moelis Australia Ltd (ASX: MOE) share price ended 7.48% lower today after the ASX investment bank released its full-year FY19 results.
What did Moelis announce?
For the full-year to 31 December 2019, Moelis recorded strong growth in revenue with statutory revenue up 7% to $153.7 million and underlying revenue up 16% to $158.3 million.
However, statutory earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 8% to $52.0 million, down from $56.2 million in the prior corresponding period (pcp). Additionally, statutory net profit after tax also came in lower, declining by 23% to $23.5 million. Despite this, underlying EBITDA showed a more positive result, up 6% from $59.8 million in the pcp to $63.5 million in FY19.
Statutory earnings per share (EPS) decreased during the period, falling 23% from 20 cents in the pcp to 15.5 cents.
On a more positive note, Moelis reported growth in net assets under management (AUM) of $1.2 billion, taking total AUM 32% higher on FY18 to $4.9 billion. The company also reported that underlying revenue in asset management increased 14% to $96.7 million.
Key strategic hires in all areas of the business was a central part of an investment for future growth strategy. In total, the company hired 24 team members across the group in FY19.
Moelis declared of a fully franked dividend of 10.0 cents per share, which was an increase of 25% on FY18. The dividend record date is 27 February 2020 with payment expected on 4 March 2020.
Strong cash balance
Moelis recorded an average cash balance in FY19 of $109.5 million, reflecting its prudent capital management strategy that provides flexibility and assists future growth.
At 31 December 2019, the company's cash balance was $128.8 million. Moelis commented that this high balance is after investing $27.2 million in a successful buy-back of 8 million shares at $3.40 per share. Moelis estimates that the impact of the share buy-back increases future EPS by approximately 5%.
Asset management division
Moelis' asset management division accounted for around 77% of Moelis' underlying EBITDA before corporate overheads in FY19.
Overall, asset management revenue which is recurring in nature represented 74% of total underlying revenue for the company's asset management activities. Importantly, Moelis noted that its base management fee income grew by 21% in FY19.
2020 outlook
Moelis noted that it has approximately $57 million of core borrowings. Of this, approximately $32 million is due for repayment in the second half of FY20.
The company has been reviewing the most cost-effective means to refinance or extend the maturity of this debt facility and according to management, pipeline of client inflows and transaction opportunities is strong.
